If a quota is in place, what will happen to the price of rubber thread if there is a large increase in demand for spandex clothing (a major user of rubber thread) ?
A) Quantity will be limited, but price will not be affected.
B) Price will increase, but as it does so, the quantity imported will also increase. This will limit the price increase somewhat.
C) Because of the quantity restriction, the increased demand will cause prices to increase.
D) The impact on prices is not clear.
Correct Answer:
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